Realfiction

Important key information and figures:
• Financing secured into 2025 through a non-dilutive loan
• 38 presentations to potential commercial partners conducted in January 2024
• 42% decrease in total revenue in Q4-2023 compared to Q4-2022
• 37% decrease in gross profit in Q4-2023 compared to Q4-2022
• 9% increase (5.6 points) in gross profit margin in Q4-2023 compared to Q4-2022
• Solvency ratio of 75.4% at 31 December 2023 compared to 79.9% at 31 December 2022
• Three patents granted during and after Q4-2023

During and after the period, Realfiction has experienced the following development in its business:

Directional Pixel Technology™ (“DPT”): In the fourth quarter of 2023, we had a strong focus on preparing for demonstrations and meetings with potential commercial partners for our groundbreaking display technology, which is now ready for licensing to relevant parties. This was time well spent, as we were able to hold 38 meetings during the Consumer Electronics Show week in Las Vegas in January 2024, with a strong overall interest shown from various display-related industries. We also completed the Innovation Fund Denmark development project, with the final grant of TDKK 740 received shortly after year-end.

Mixed Reality displays: In Q4-2023, the revenue from sales and services related to our Mixed Reality displays was higher compared to the previous quarter, but substantially lower than in the same period last year. This was expected even though Q4 is usually a stronger sales quarter, as on the other hand it is natural to see an overall decline in revenue from this business as we have a strong focus on securing licensing agreements for our DPT platform. We are confident that this is a wise allocation of our resources, considering that DPT licensing has the potential to create much stronger cash flows compared to our Mixed Reality display related business.

CEO Clas Dyrholm comments: “It was with our shareholders’ best interest in mind that we secured a loan of 20 MSEK that was received in cash in February 2024. This non-dilutive financing provides us with enough cash to extend our runway throughout 2024, and we have an additional lending opportunity in a second tranche of the loan facility of 15 MSEK. Our current plans, however, do not envision drawing down the second tranche of the loan. In 2024, we aim to enter into licensing agreements for our intellectual property, thereby generating cash inflows that will allow us to minimize our financing costs. Nevertheless, maintaining access to this second tranche enhances our leverage, providing us with the flexibility to negotiate the most favorable terms for Realfiction and to best serve our shareholders’ interests. With a world-class IP portfolio ready to be licensed to commercial partners, several ongoing discussions with such potential partners, and financing secured into 2025, we are in an excellent position to take the company into the next part of our commercialization phase, were we start to see an inflow of license-based revenue.”

We highlight the following key figures from the Year-End Report:

Q4 2023 (1 October – 31 December 2023)
• Revenue: TSEK 2,792 (Q4-2023: TSEK 4,799)
• Gross profit: TSEK 1,938 (Q4-2023: TSEK 3,063)
• Gross profit margin: 69.4% (Q4-2023: 63.8%)
• Result after financial items: TSEK -2,308 (Q4-2023: TSEK -208)
• Earnings per share: SEK -0.01 (Q4-2023: -0.10)
• Cash flow from operating activities: TSEK 3,194 (Q4-2023: TSEK 7,053)
• Equity: TSEK 67,471 (Q4-2023: TSEK 73,787)

Q1-Q4 2023 (1 January – 31 December 2023)
• Revenue: TSEK 9,923 (Q1-Q4 2022: TSEK 14,209)
• Gross profit: TSEK 6,525 (Q1-Q4 2022: TSEK 9,180)
• Gross profit margin: 65.8% (Q1-Q4 2022: 64.6%)
• Result after financial items: TSEK -8,120 (Q1-Q4 2022: TSEK -2,066)
• Earnings per share: SEK -0.31 (Q1-Q4 2022: -0.07)
• Cash flow from operating activities: TSEK -2,295 (Q1-Q4 2022: TSEK 4,513)
• Equity: TSEK 67,471 (Q1-Q4 2022: TSEK 73,787)